6 ms·

Should digital monopolies be broken up?

41 points by lcuff 12y ago

baddox 12y ago
> European moves against Google are about protecting companies, not consumers I'm pretty skeptical of all government antitrust infrastructure for precisely this reason. Why should I expect a government to use its antitrust authority only against actual trusts that threaten consumers or industry (assuming for the moment that those routinely exist), rather than use it to help certain corporations gain market power? That said, most of my armchair research has centered on the history of antitrust in the USA (I recommend reading Gabriel Kolko for some distilled revisionist history on the topic), and I know little about how it works in Europe and elsewhere.
- nickik 12y ago
  If you go a bit deeper and look at the news article from back in the day, some of the most well known journalist that were attacking the 'Robber Barrons' were actually relatives of the companys that were getting crushed. In the time were the evil Standard Oil gained there monopoly the price of oil was falling consistently, and they were beeing accused of doing price gauging while in reality they were just more productive. There are tons of other examples, one was the company that invented the cooled train cart so that local butcher were pretty usless. Guess who was attacked as beeing a evil monopolist? Well the company that manged to push down prices. Its really sad that all the research going into that time is ignored by most econoimst, and they just repeat what they learned in collage.
andrewmutz 12y ago
"Like Facebook, Amazon and other tech giants, it benefits from the network effects whereby the popularity of a service attracts more users and thus becomes self-perpetuating." The network effect is very clear with Facebook, but it is not clear to me at all when it comes to Google Search. The product doesn't seem to get any better or worse when more people use it.
- nickik 12y ago
  Playing devils advocate "Well they are making more profit, and they can invest that in there product and then make it better. Dont you see the network effect?".
  - pgeorgi 12y ago
    You'd have a network effect if the presence of third parties (the "network") coerces you to choose one product over another. Say, Facebook over Diaspora because your peers are all in the former but not the latter (ignoring the other, quite material, differences for this example), or the monopolist's telephone network over another (that the monopolist refuses to peer with at reasonable rates). Possibly ad-networks, too (tons of ad spaces spread over the entire web with good payout rates) - which is why the FTC requested some changes to the AdSense ToS (regarding the use of multiple ad networks) and got them. IMHO the attempt (by several european telcos) to force open messenger networks for interoperability might get more traction than attacking search engines for "network effects". I just hope that (should this ever happen) it will be a poisoned gift in that instead of giving telcos preferential treatment, they (Facebook/WhatsApp, Google, MS) simply provide fully open interfaces - and users continue to route around the failure that is telco messaging.
- frabcus 12y ago
  Yes, Google Search does get better the more people use it. There are three reasons: 1) The actual search gets more signal. Literally from activity on the search engine, but also from many other places Google gets data. 2) The more popular Google is as a traffic source, the more people pay attention to getting that traffic. Website owners put effort into specifically making Google search results good. Some of that is bad SEO, but a lot of SEO (i.e. making good websites) delivers lots of value, and it is basically all Google-targeted right now. As a very simple (negative!) example - think of sites with a robots.txt that allows only a small number of search engines. 3) Advertising. Google's marketplace for ads gets better the more people use it, on both sides of the two sided market. Why's this matter? Because it generates money, more effectively than any competitor. And they use that money to buy engineers to improve the search experience (and, indeed, the ad relevance experience!) To me, that's a very clear network effect.
nickik 12y ago
Google has commited the evil crime that of not playing nice with the big german media companys and they have spend the last 5 years going after google. You might not be a google fan, but let me tell you, you dont want to support Axel Springer over google. The german hacker scene has spend years and years fighing against all the laws Axel Springer tries to push threw governemnt that would hurt the internet. The lates one, "Leistungsschutzrecht", actually passed, but now instead of google paying them money, google kicked them out and everything happend as hackers said it would, the websides lost a lot of views. Now that they have (finally) figured out that was a unbelivably stupid idea, they are moving forward to the next part of government that they can manipulate and target against google. My last information was that the antitrust people to told them that they should better calme them, or they would be investigated. Now they probebly just do what everybody does when they cant pass a law in germany. They move up to EU level, force the EU to it, and then the EU forced germany to do it. The same allready happend with the "Vorratsdatenspeicherung" (mass surveillance). They generally have a hard time passing these idiotic laws because the german hacker community is very, very politcal but the managed it with the "Leistungsschutzrecht" but not with the "Vorratsdatenspeicherung". I for one thing, that even if google had some unfair market position, its well deserved. I dont use them because they force me, or I dont have any other choice. I use them because they are far better then the competition. Based on the same idea on could block any tech company that has a technical advantage or a unique product. You might also want to arrest Brad Pitt because he has a monopoly on beeing Brad Pitt. Google is in competition with lots of alternative search engines that are more or less specialised, and even if they were not, I dont see why one should go after a company that is so good that nobody wants to compete with them. If everybody was complaining how terrible google is and how much they hate it, but they cant find a alternative, then we might strick up a conversation again.
- thecopy 12y ago
  Agreed. Google is big because they are good, not the other way around.
- onesongonesong 12y ago
  This is just dirty playing at it's finest, trying to dissolve a company that actually does work and instil it with even more bureaucracy. I don't complain that google uses it search to improve it's own products, it's awesome actually. From knowing what kind of food I prefer to show me recommendations, to targeting me with ads that actually interest me. I'd rather pay 10$ for a gadget I saw on an ad than for a penis enlargement pill or give my credit card number because I am a millionth visitor. What do you believe could be hidden motives behind Axel Springer trying to push google out? More money for them from ads?
r0h1n 12y ago
One drawback in most analyses of digital monopolies I've read, including this one, is that they use a lot of past examples (IBM, Microsoft, MySpace or even Orkut) that do not capture the dramatically different tech landscape we're part of today. Thanks to the trifecta of ubiquitous smartphones, pervasive Internet and no-holds-barred data mining, I'd argue that the tech landscape we inhabit today is very different from anything we've ever encountered. Say a startup does create a better product than Google or Facebook, it can't charge for it, because everything is free. It certainly can't monetize it better than Google or Facebook because they have infinitely more data on users than any startup can even fathom. It has to go through Google's and Facebook's "gates" to find and retain customers. Those precious few that do manage to pull off the impossible, like Whatsapp, will be quickly bought over by Google or Facebook. Thus closing off any gaps that existed in their defense and reducing the possibility of independent competition even more. Any meaningful analysis of digital monopolies needs to understand this instead of just relying on past examples. Edit: I'm not saying the EU is right, or that their motives are kosher. Merely that we need to do a comprehensive forward-looking analysis of Google's dominance, extrapolating from present data and trends. Using past data alone strikes me as lazy or self-serving.
- nickik 12y ago
  Past examples also such because they are bad examples. The Antitrust case against IBM was dropped because it dragged on so long and by the end IBM had lost the monopoly allready. The real story is the guy who was going after IBM died and nobody else was perticularly intrested in keeping it going. The same goes for microsoft, I dont think the antitrust laws led to the weaker market position it now has. There product sucked, people moved on, and forced microsoft to up there game.
  - wpietri 12y ago
    Internet Explorer had greater than 90% market share at the peak, and Microsoft was vigorously arguing that it was such an integrated part of the operating system that having a choice was impossible. The whole problem with monopolies is that it doesn't matter if their product sucks because you don't really have any other options. People can only move on if they have a choice.
cabinpark 12y ago
No one is forcing you to use Google, Facebook, Amazon or any other Internet website. End of story for me.
- corin_ 12y ago
  I'm fully on Google's side in this news story, but the fact that no-one forces you to use them... that's irrelevant to monopoly or anti-competitive laws (both of which are good things to exist, even if they can lead to shitty attempts at execution).
  - nickik 12y ago
    What are the brilliant sucess storys of antitrust laws? I have spend a fair bit of time reasearching them and far more then 50% of the cases it was just losing competition looking for governemnt hand outs. So if that is true, on what bases do you defend them? Let me give you a example for another imaganry law. Assume cops are allowed to walk around with full automatic weapons. Now in the majority of cases this causes suffering for people who are not at fault. In a few cases it helped. Now, your argument applies, sometimes you need automatic weapons. My question is does that make it good these laws exist? (Note I know nothing about the this example or what the data is there, its a example). Also in the antitrust cases there are tons of external cost. Companys spend there money on lobbying and laywers because they think its more effective then improving there product. Good companys getting hurt and also having to spend money on defence. There is also massiv amount of tax dollers spend on these things.
    - corin_ 12y ago
      This isn't an area I've ever looked into, so you could well be right that the negatives outweigh the benefits. My gut instinct is to disagree with you, i.e. you'd have to show me the evidence to change my mind (don't get me wrong - I could equally gather it myself if I cared enough, and I'm not actually asking you to try to change my mind). I'm defending them on the basis that the theory is good. For example the theory of cops having fully automatic weapons is good (they stop criminals, the more armed they are the more they can do that), but you're absolutely right about cost/benefits, and I'd always support less-armed police over more-armed police. My point was that you can argue the negatives outweigh the benefits, but "you can choose not to use them" in the context of a monopolies debate isn't relevant.
flexie 12y ago
Let's look at things in perspective. Axel Springer with EUR2.8B revenue and 13,000 employees and few million readers is a modest size company, and not that important to German economy, much less to European. Certainly less important to Europe than Google is to America ($60B revenue, 50,000 employees, billions of users, facilitating foreign intelligence etc.). Further, it is likely to be even less important in the future since it's in a shrinking industry. Most of the revenue of Springer is still from print media. Also, please note that the Germans take up less than 13 percent of the seats in the European Parliament. I am neither German nor American. I don't hate Google and I use its services regularly. But German interest in splitting up Google is certainly smaller than American interest in keeping it together. It's not like there is a single German (or European) company ready to take over search (or email or video or smart phones) if Google was split up. And Google's monopoly in Europe is extreme. All web businesses spend a significant amount of time optimizing for this one gatekeeper. If you are not visible on Google, you are out of business. 90 percent of searches in many European countries are on Google. Not because it's much better than it's competitors any more, but because of habits and that it owns the platforms (Android, Chrome). The only challengers to Google that I have seen in the last 10 years is Apple and Facebook. As I remember it, Google benefitted when Microsoft was forced to unbundle Internet Explorer from Windows and again when Microsoft was forced to give users a clear choice not to use Microsoft search in Internet Explorer. The mother of all antitrust cases what that which ended with the breaking up Standard Oil, the Google of its time. The European parliament doesn't have the authority to break up Google but the EU certainly has the authority to do so, and in general to regulate the businesses that operate in Europe. Personally, I'd rather have EU force Google and the other digital giants to pay taxes in Europe on their vast European profits. In a few years Google will likely be less important due to new technological developments, just like Standard Oil probably would have been less of a monopoly after WWI even without being broken up due to new technologies like electricity (instead of kerosene).
deleted 12y ago
[deleted]
- corin_ 12y ago
  > France has a 70% tax on the super rich Things like that are about political values and being far more left-leaning than America on average, not about punishing people. I'd personally benefit from having your point of view on taxes (i.e. I'm well off), but I still support higher taxes here in the UK for higher-earning people. I'm someone who plans to start my own company some day (but don't want to yet), who still supports higher tax rates for businesses. I'm someone who has never claimed state benefits (obviously state services, but not unemployment, disability, etc.) and hopefully never will, but still supports increasing those benefits being increased not decreased.
jasonisalive 12y ago
It's nonsense like this that makes me really doubt whether Europe has a future. So much negativity.
Fraazz 12y ago
Google should be broken into three companies. It's not just their search engine that is a monopoly. They should give up Android and Google apps. Apple's market share is slipping and Android growing. It's just another advertising tool and platform for them to push out their apps.
happyscrappy 12y ago
Europeans can flag these stories out of existence all they like but they are the ones stuck with these ridiculous rulings.

41 points by lcuff 12y ago

> European moves against Google are about protecting companies, not consumers I'm pretty skeptical of all government antitrust infrastructure for precisely this reason. Why should I expect a government to use its antitrust authority only against actual trusts that threaten consumers or industry (assuming for the moment that those routinely exist), rather than use it to help certain corporations gain market power? That said, most of my armchair research has centered on the history of antitrust in the USA (I recommend reading Gabriel Kolko for some distilled revisionist history on the topic), and I know little about how it works in Europe and elsewhere.

nickik 12y ago
If you go a bit deeper and look at the news article from back in the day, some of the most well known journalist that were attacking the 'Robber Barrons' were actually relatives of the companys that were getting crushed. In the time were the evil Standard Oil gained there monopoly the price of oil was falling consistently, and they were beeing accused of doing price gauging while in reality they were just more productive. There are tons of other examples, one was the company that invented the cooled train cart so that local butcher were pretty usless. Guess who was attacked as beeing a evil monopolist? Well the company that manged to push down prices. Its really sad that all the research going into that time is ignored by most econoimst, and they just repeat what they learned in collage.

andrewmutz 12y ago

"Like Facebook, Amazon and other tech giants, it benefits from the network effects whereby the popularity of a service attracts more users and thus becomes self-perpetuating." The network effect is very clear with Facebook, but it is not clear to me at all when it comes to Google Search. The product doesn't seem to get any better or worse when more people use it.

nickik 12y ago
Playing devils advocate "Well they are making more profit, and they can invest that in there product and then make it better. Dont you see the network effect?".
- pgeorgi 12y ago
  You'd have a network effect if the presence of third parties (the "network") coerces you to choose one product over another. Say, Facebook over Diaspora because your peers are all in the former but not the latter (ignoring the other, quite material, differences for this example), or the monopolist's telephone network over another (that the monopolist refuses to peer with at reasonable rates). Possibly ad-networks, too (tons of ad spaces spread over the entire web with good payout rates) - which is why the FTC requested some changes to the AdSense ToS (regarding the use of multiple ad networks) and got them. IMHO the attempt (by several european telcos) to force open messenger networks for interoperability might get more traction than attacking search engines for "network effects". I just hope that (should this ever happen) it will be a poisoned gift in that instead of giving telcos preferential treatment, they (Facebook/WhatsApp, Google, MS) simply provide fully open interfaces - and users continue to route around the failure that is telco messaging.
frabcus 12y ago
Yes, Google Search does get better the more people use it. There are three reasons: 1) The actual search gets more signal. Literally from activity on the search engine, but also from many other places Google gets data. 2) The more popular Google is as a traffic source, the more people pay attention to getting that traffic. Website owners put effort into specifically making Google search results good. Some of that is bad SEO, but a lot of SEO (i.e. making good websites) delivers lots of value, and it is basically all Google-targeted right now. As a very simple (negative!) example - think of sites with a robots.txt that allows only a small number of search engines. 3) Advertising. Google's marketplace for ads gets better the more people use it, on both sides of the two sided market. Why's this matter? Because it generates money, more effectively than any competitor. And they use that money to buy engineers to improve the search experience (and, indeed, the ad relevance experience!) To me, that's a very clear network effect.

nickik 12y ago

Google has commited the evil crime that of not playing nice with the big german media companys and they have spend the last 5 years going after google. You might not be a google fan, but let me tell you, you dont want to support Axel Springer over google. The german hacker scene has spend years and years fighing against all the laws Axel Springer tries to push threw governemnt that would hurt the internet. The lates one, "Leistungsschutzrecht", actually passed, but now instead of google paying them money, google kicked them out and everything happend as hackers said it would, the websides lost a lot of views. Now that they have (finally) figured out that was a unbelivably stupid idea, they are moving forward to the next part of government that they can manipulate and target against google. My last information was that the antitrust people to told them that they should better calme them, or they would be investigated. Now they probebly just do what everybody does when they cant pass a law in germany. They move up to EU level, force the EU to it, and then the EU forced germany to do it. The same allready happend with the "Vorratsdatenspeicherung" (mass surveillance). They generally have a hard time passing these idiotic laws because the german hacker community is very, very politcal but the managed it with the "Leistungsschutzrecht" but not with the "Vorratsdatenspeicherung". I for one thing, that even if google had some unfair market position, its well deserved. I dont use them because they force me, or I dont have any other choice. I use them because they are far better then the competition. Based on the same idea on could block any tech company that has a technical advantage or a unique product. You might also want to arrest Brad Pitt because he has a monopoly on beeing Brad Pitt. Google is in competition with lots of alternative search engines that are more or less specialised, and even if they were not, I dont see why one should go after a company that is so good that nobody wants to compete with them. If everybody was complaining how terrible google is and how much they hate it, but they cant find a alternative, then we might strick up a conversation again.

thecopy 12y ago
Agreed. Google is big because they are good, not the other way around.
onesongonesong 12y ago
This is just dirty playing at it's finest, trying to dissolve a company that actually does work and instil it with even more bureaucracy. I don't complain that google uses it search to improve it's own products, it's awesome actually. From knowing what kind of food I prefer to show me recommendations, to targeting me with ads that actually interest me. I'd rather pay 10$ for a gadget I saw on an ad than for a penis enlargement pill or give my credit card number because I am a millionth visitor. What do you believe could be hidden motives behind Axel Springer trying to push google out? More money for them from ads?

r0h1n 12y ago

One drawback in most analyses of digital monopolies I've read, including this one, is that they use a lot of past examples (IBM, Microsoft, MySpace or even Orkut) that do not capture the dramatically different tech landscape we're part of today. Thanks to the trifecta of ubiquitous smartphones, pervasive Internet and no-holds-barred data mining, I'd argue that the tech landscape we inhabit today is very different from anything we've ever encountered. Say a startup does create a better product than Google or Facebook, it can't charge for it, because everything is free. It certainly can't monetize it better than Google or Facebook because they have infinitely more data on users than any startup can even fathom. It has to go through Google's and Facebook's "gates" to find and retain customers. Those precious few that do manage to pull off the impossible, like Whatsapp, will be quickly bought over by Google or Facebook. Thus closing off any gaps that existed in their defense and reducing the possibility of independent competition even more. Any meaningful analysis of digital monopolies needs to understand this instead of just relying on past examples. Edit: I'm not saying the EU is right, or that their motives are kosher. Merely that we need to do a comprehensive forward-looking analysis of Google's dominance, extrapolating from present data and trends. Using past data alone strikes me as lazy or self-serving.

nickik 12y ago
Past examples also such because they are bad examples. The Antitrust case against IBM was dropped because it dragged on so long and by the end IBM had lost the monopoly allready. The real story is the guy who was going after IBM died and nobody else was perticularly intrested in keeping it going. The same goes for microsoft, I dont think the antitrust laws led to the weaker market position it now has. There product sucked, people moved on, and forced microsoft to up there game.
- wpietri 12y ago
  Internet Explorer had greater than 90% market share at the peak, and Microsoft was vigorously arguing that it was such an integrated part of the operating system that having a choice was impossible. The whole problem with monopolies is that it doesn't matter if their product sucks because you don't really have any other options. People can only move on if they have a choice.

cabinpark 12y ago

No one is forcing you to use Google, Facebook, Amazon or any other Internet website. End of story for me.

corin_ 12y ago
I'm fully on Google's side in this news story, but the fact that no-one forces you to use them... that's irrelevant to monopoly or anti-competitive laws (both of which are good things to exist, even if they can lead to shitty attempts at execution).
- nickik 12y ago
  What are the brilliant sucess storys of antitrust laws? I have spend a fair bit of time reasearching them and far more then 50% of the cases it was just losing competition looking for governemnt hand outs. So if that is true, on what bases do you defend them? Let me give you a example for another imaganry law. Assume cops are allowed to walk around with full automatic weapons. Now in the majority of cases this causes suffering for people who are not at fault. In a few cases it helped. Now, your argument applies, sometimes you need automatic weapons. My question is does that make it good these laws exist? (Note I know nothing about the this example or what the data is there, its a example). Also in the antitrust cases there are tons of external cost. Companys spend there money on lobbying and laywers because they think its more effective then improving there product. Good companys getting hurt and also having to spend money on defence. There is also massiv amount of tax dollers spend on these things.
  - corin_ 12y ago
    This isn't an area I've ever looked into, so you could well be right that the negatives outweigh the benefits. My gut instinct is to disagree with you, i.e. you'd have to show me the evidence to change my mind (don't get me wrong - I could equally gather it myself if I cared enough, and I'm not actually asking you to try to change my mind). I'm defending them on the basis that the theory is good. For example the theory of cops having fully automatic weapons is good (they stop criminals, the more armed they are the more they can do that), but you're absolutely right about cost/benefits, and I'd always support less-armed police over more-armed police. My point was that you can argue the negatives outweigh the benefits, but "you can choose not to use them" in the context of a monopolies debate isn't relevant.

flexie 12y ago

Let's look at things in perspective. Axel Springer with EUR2.8B revenue and 13,000 employees and few million readers is a modest size company, and not that important to German economy, much less to European. Certainly less important to Europe than Google is to America ($60B revenue, 50,000 employees, billions of users, facilitating foreign intelligence etc.). Further, it is likely to be even less important in the future since it's in a shrinking industry. Most of the revenue of Springer is still from print media. Also, please note that the Germans take up less than 13 percent of the seats in the European Parliament. I am neither German nor American. I don't hate Google and I use its services regularly. But German interest in splitting up Google is certainly smaller than American interest in keeping it together. It's not like there is a single German (or European) company ready to take over search (or email or video or smart phones) if Google was split up. And Google's monopoly in Europe is extreme. All web businesses spend a significant amount of time optimizing for this one gatekeeper. If you are not visible on Google, you are out of business. 90 percent of searches in many European countries are on Google. Not because it's much better than it's competitors any more, but because of habits and that it owns the platforms (Android, Chrome). The only challengers to Google that I have seen in the last 10 years is Apple and Facebook. As I remember it, Google benefitted when Microsoft was forced to unbundle Internet Explorer from Windows and again when Microsoft was forced to give users a clear choice not to use Microsoft search in Internet Explorer. The mother of all antitrust cases what that which ended with the breaking up Standard Oil, the Google of its time. The European parliament doesn't have the authority to break up Google but the EU certainly has the authority to do so, and in general to regulate the businesses that operate in Europe. Personally, I'd rather have EU force Google and the other digital giants to pay taxes in Europe on their vast European profits. In a few years Google will likely be less important due to new technological developments, just like Standard Oil probably would have been less of a monopoly after WWI even without being broken up due to new technologies like electricity (instead of kerosene).

deleted 12y ago

[deleted]

corin_ 12y ago
> France has a 70% tax on the super rich Things like that are about political values and being far more left-leaning than America on average, not about punishing people. I'd personally benefit from having your point of view on taxes (i.e. I'm well off), but I still support higher taxes here in the UK for higher-earning people. I'm someone who plans to start my own company some day (but don't want to yet), who still supports higher tax rates for businesses. I'm someone who has never claimed state benefits (obviously state services, but not unemployment, disability, etc.) and hopefully never will, but still supports increasing those benefits being increased not decreased.

jasonisalive 12y ago

It's nonsense like this that makes me really doubt whether Europe has a future. So much negativity.

Fraazz 12y ago

Google should be broken into three companies. It's not just their search engine that is a monopoly. They should give up Android and Google apps. Apple's market share is slipping and Android growing. It's just another advertising tool and platform for them to push out their apps.

happyscrappy 12y ago

Europeans can flag these stories out of existence all they like but they are the ones stuck with these ridiculous rulings.